The Chinese Public Doesn’t Know What the Rules Are Anymore

the-chinese-public-doesn’t-know-what-the-rules-are-anymore

The Chinese public is floundering.

All around ordinary people, the iron laws of China’s state capitalism that they once trusted are crumbling: The price of housing, believed for decades to keep rising, fell for the first time in six years this spring in more than half of China’s biggest cities. A college education, once considered a stepping stone into the middle class, has now become a major contributor to mass unemployment, with youth unemployment hitting 19.9 percent in July. The migration from countryside to cities used to be a one-way journey; this year, jobless migrant workers who ran out of savings have no recourse but to return to the land.

People who thought they knew how the rules worked are left bruised and betrayed. Some have resorted to rare acts of public defiance: In July, tens of thousands of homebuyers staged a mortgage strike over apartments whose construction has been delayed or stalled by a housing sector cash crunch. In the same month, hundreds of people launched protests in Henan province over frozen deposits in rural banks that risked insolvency.

The Chinese public is floundering.

All around ordinary people, the iron laws of China’s state capitalism that they once trusted are crumbling: The price of housing, believed for decades to keep rising, fell for the first time in six years this spring in more than half of China’s biggest cities. A college education, once considered a stepping stone into the middle class, has now become a major contributor to mass unemployment, with youth unemployment hitting 19.9 percent in July. The migration from countryside to cities used to be a one-way journey; this year, jobless migrant workers who ran out of savings have no recourse but to return to the land.

People who thought they knew how the rules worked are left bruised and betrayed. Some have resorted to rare acts of public defiance: In July, tens of thousands of homebuyers staged a mortgage strike over apartments whose construction has been delayed or stalled by a housing sector cash crunch. In the same month, hundreds of people launched protests in Henan province over frozen deposits in rural banks that risked insolvency.

Taken together, these crises make a mockery of the dictum—current since China began its extraordinary growth in the 1990s—that the Chinese Communist Party offers its people security and prosperity in exchange for political loyalty. The unusual eruptions of public rage are not just a result of the party’s failure to keep up its side of the bargain; it is also the fact that much of the recent difficulties are the product of erratic, reckless party policies.

The onslaught began last year, when the party launched heavy crackdowns on the thriving technology and education industries, leading to the sudden layoff of hundreds of thousands of people, especially young people, who made up the majority of both sectors. It also tightened regulations on the housing market, the main component of Chinese household wealth—dampening consumption and dimming investor confidence. When COVID-19’s omicron variant hit China this spring, the party dug in its heels on its “zero-COVID” policy; it enacted a series of lockdowns, from Shanghai to the northeastern province of Jilin, so ineptly planned that millions of residents were left wringing their hands over supplies of basic necessities like food and medicine.

As people reel from the policy hurricane, the bulwark they once leaned on is gone. A party that has been known since the 1980s for its pragmatism and commitment to social stability has turned itself into an agent of chaos and, in extreme cases, a direct threat to people’s livelihoods.

It is not that many people would dispute the problems the party policies claimed to address. After all, the exorbitant costs of housing and education have long been a focus of ferocious complaints among aspirants to middle-class life, from builders who couldn’t remotely afford the apartments they constructed to parents struggling to keep up in the Red Queen’s race of tuition fees and extracurriculars for exhausted children. And the “zero-COVID” policy had served the country well until the emergence of omicron, saving millions of lives and allowing the economy to hum along when virus-plagued Western countries suffered heavy losses of economic output.

But the crudeness of the policy instruments and their vast collateral damage has deeply unnerved the public. From erasing the $100 billion private tutoring industry with one stroke of a pen to forcing millions of people into monthslong lockdowns with little notice, the party wields its power with little regard for its consequences on the population.

Its effect on people’s psyche is evident in a grim joke that circulated on China’s internet during the Shanghai lockdown: The unluckiest devil in 2022 China, it went, is the person who “lives in Shanghai, invests in stocks, works in real estate, and has a partner in after-school tutoring. His parents have chronic illnesses, his child is walking from remote schooling straight into the college entrance exam, and he bought a pre-sold apartment from Evergrande. Listening to the government, he did not stock up on groceries, and under its encouragement, he now awaits the birth of his third child.”

Some of the damage the policies caused on people’s economic lives may be repaired by a loosening of restrictions. Harder to restore, however, is people’s lost confidence in “their ability to base their lives on secure expectations of the future,” wrote a prominent online commentator who goes by the name “Fantong Dai Boss” in a viral WeChat post in April titled “I Terribly Miss 2019.”

Many of the party’s sweeping policies were carried out under the banner of “common prosperity,” a key concept that embodies Chinese President Xi Jinping’s vision for a more equal society. For all the upheavals the policies have caused, however, there is good reason to doubt it will genuinely address China’s yawning wealth gap. Experts such as Michael Pettis, professor of finance at Peking University, and economists at the Organisation for Economic Cooperation and Development agree that larger systemic changes are necessary to bring down inequality.

They might include, among others, fixing the mismatch between an education system geared toward the glamor of a college education and a job market that still mostly needs workers with vocational training or implementing a nationwide property tax to deter speculative purchases and consequently reduce the wealth gap. Short of pushing through those changes, arbitrary crackdowns on what the party deems capitalist excess are knocking away the few ladders of upward mobility available to people, rickety they may be, without putting anything in their place.

There is another reason why the party is increasingly seen as causing more problems than it sets out to solve, and it is self-inflicted: With its tight control on the media, the party works assiduously to downplay any tragedies or failures that might undermine its leadership. Despite the enormity of China’s property debt, for instance, there is little in the media that explores the issue systematically and in depth—for doing so would implicate state players like local governments, which rely on proceeds from land sales for their revenues.

Such reports, if made available, might not ease the pain of homeowners stuck with unfinished properties. But it would help them to see the current state-mandated credit tightening as a remedy to the mistakes of the past, a difficult yet much-needed step in deflating the property bubble. It’s difficult, however, for the government to admit its own mistakes.

The party is more transparent about the risks of COVID-19. In official speeches and newspaper editorials, it has repeatedly explained the circumstances that would make an unchecked spread of COVID-19 particularly disastrous for China, including the low vaccination rates among older adults and the inadequate health care infrastructure. The explanation is borne out by science, but it is undercut by the party’s own vastly underreported COVID-19 death numbers in the initial Wuhan outbreak and, more recently, in Shanghai. If Shanghai residents were to take the official death count seriously, they could hardly fail to wonder why the party put a city of nearly 25 million people through a traumatizing two-month lockdown, all for a virus not more deadly than the flu.

In late June, less than a month after Shanghai lifted its lockdown and Beijing had a lockdown scare of its own, a notice appeared in Beijing Daily, a state newspaper, in which the city’s party chief, Cai Qi, vowed to uphold the zero-COVID policy “for the next five years.” The newspaper soon removed the time duration, calling it an “editing error”—but not before it triggered a mass panic on Chinese social media. Such is the fears that haunt Chinese people at the moment: They expect the next threat to their livelihood to come not from the virus or what party propaganda calls “Western anti-China forces” but from another reckless party policy.

At the 20th National Party Congress on Oct. 16, Xi is expected to claim an unprecedented third term as party chairman. The celebration of his policy accomplishments set to roll out during the event will sound like a cruel farce to those who suffered their consequences. When faced with difficulty, Xi always urged the Chinese people to struggle. He is too afraid to admit that they already are.

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